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The Japanese Business Community and National Trade Policy: 1920-1942.

The Japanese Business Community and National Trade Policy, 1920-1942 This is a sharply focused study of Japanese trade policy between the two world wars, emphasizing the role of the business community. William Fletcher found that, although business groups often dictated the terms of specific trade policies, they were unable to sway the government on large issues. He moves with easy competence through such esoteric subjects as the debates over joining and then abandoning the gold standard, negotiating of textile export restraints with British India, and development of a national trade policy. Fletcher's crisp explanation of Japan's trade dilemma after the First World War will definitely be enlightening one group of college students next semester (pp. 28-30).

Interestingly, given the enormous emphasis on unique Japanese economic structures and management styles in postwar literature, Fletcher argues that several of these structures were originally inspired by Western models. Thus, the idea for establishing a business federation came from a trip to Britain (p. 20), and the main argument for establishing business cartels was that European countries already had them (p. 44).

Most often, decisions on trade were the products of considerable business-government negotiation--and often even greater dissention within business and bureaucratic ranks. In fact, the evidence here of disunity in both the public and private camps is great enough to suggest that the dominant paradigm of business versus government is inadequate. The Japan Spinners Association, like textile producers elsewhere, was often at odds with other business leaders over trade policy, for example. Likewise, the Ministry of Finance regularly torpedoed plans developed by other ministries that it considered too expensive. If anything, Fletcher underemphasizes the level of disunity, since his study concentrates on the larger, better-organized firms. "Business community" is his translation for Japanese zaikai, but perhaps "business elite" better captures the place of this group in the Japanese economy. Japan's myriad tiny producers were poorly represented by zaikai, which often saw war preparations as a golden opportunity to swallow up smaller competitors (see pp. 36-37). They did so in league with government officials, who encouraged the large firms' behavior to boost industrial efficiency.

On another issue that cut across the public-private divide by the time the Pacific War broke out in 1941, Fletcher shows that the trade problem was so closely entwined with war in all Japanese minds (although in a variety of configurations) that all international commerce had been defined as something very close to war. Moreover, nearly all business leaders agreed that foreign trade required national-level planning in close collaboration with the Japanese government.

The study also addresses the question of business responsibility for war, although somewhat obliquely. The picture that emerges is not a pretty one. In Fletcher's own words, "caution, ambivalence, and opportunism marked the attitude of the business community toward Japan's subjugation of the Asian mainland" (p. 2). While businessmen muttered complaints over military aggression when it directly threatened their profits, they quickly accommodated themselves to each military maneuver.

More crucially, the business leaders could not provide a strong alternative ideology to military adventurism because they shared too many basic assumptions with Japan's unabashed imperialists. Contributing to repression at home, the majority of business leaders in this study argued for suppression of domestic demand in order to lower the price of Japan's exports. Only after defeat in the Second World War could Japan break out of this pattern of a tiny domestic market and hungry exporting industries.

Many businessmen approached problems of economic policy, such as setting a new rate for the yen, as "a test of national character" (pp. 67, 77). This recasting of strategic decisions as moral ones (and of opponents as weak-willed and unpatriotic) echoed the rhetoric of the military and its celebration of sincerity over logic, patriotism as a justification for terrorism, and substitution of moral exhortation for careful strategic planning. Adherence to these beliefs meant that zaikai were unable to counter popular portrayals of themselves as selfish and profiteering. By 1941 they were forced to defend the concept of profit-taking--a considerable retreat from the brashly confident 1920s.

Japanese corporations also enjoyed all the privileges of military power in China. They lobbied vigorously against any relaxation of the unequal commercial treaties there. The textile manufacturers called in the Japanese army to defend their factories in China as early as 1927 and several times thereafter. To describe their position as a force for peace is quite misleading. Though business leaders neither knew in advance nor approved of the military annexation of Manchuria, they adjusted their plans to the new arrangement with a minimum of complaint. Their main objection to the annexation was that it would poison trade relations with the United States and with the European countries and their colonies without providing an adequate economic base for Japan. Yet, when those predictions proved true, the businessmen became enthusiastic champions of a yen bloc.

Perhaps business leaders did not agree entirely with military priorities, but their assumptions about Japan's place in the world were similar enough to preclude any viable alternative, even though many individual members of the business elite were quite cosmopolitan. The lack of clear divisions of power between government and zaikai expresses their community of vision more than dominance by one group over the other. This was prewar Japan's tragedy.

Laura E. Hein, assistant professor of Japanese history at Northwestern University, is the author of Fueling Growth: The Energy Revolution and Economic Policy in Postwar Japan (1990). She is spending 1990-91 in Japan on a Fulbright fellowship, researching the political context of high-speed growth policy in postwar Japan.
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Author:Hein, Laura E.
Publication:Business History Review
Article Type:Book Review
Date:Jun 22, 1990
Words:925
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